Nominated Consultant

John,

Interesting situation, but the bottom line is you know the situation and have to bid accordingly - the same as everyone else.

Would I be right that once the contract is made, the consultant will work for you under some form of novation contract? if not, that’s the first thing to look into - and get proper legal advice on it as a badly written novation contract may leave you holding the baby for design work rather than the consultant.

John,

From what you describe, it seems to not be unusual. Essentially, the Client is what they call the “Design Authority”. He, the Client, has the final-say in determining the design. However, it would be prudent to get it defined in the contract, before-hand, as to who precisely holds the Design Authority.

The question I ask is: are you bidding for the contract to design the building, just to erect the building, or both? Are you bidding to erect the building before the Consultant has even designed it? Is the contract a fixed-price or target-price?

Regardless of who holds the Design Authority, you must ensure that you have a tremendous amount of communication with the Client/Consultant and keep him informed and allow him his input ALL THE WAY THROUGH. That way, it minimises disputes. If the Client/Consultant changes something ¾ of the way through, and he has approved everything up to that point, then it puts you, the Contractor, in a much better position to claim additional costs associated with such changes….all subject to what the Contract states. Moreover, if the contract is a fixed-price, and you’re generally happy to work on such a basis, it is not unusual to load the contract and programme with levels of contingency that are commensurate with the perceived risks.

Basically, the Consultant is the Employers Representative (ER) and you might treat the Consultant just as you would the Client. Remember though, the Client can always sack the Consultant if he’s causing too much trouble and being over-zealous. We’ve seen it happen!

The best protection, ultimately, is the levels of communication, Contract Scope-of-Work and Approvals procedures.

HTH.

James.

James has some very valid points but from the term EPC I am assuming you are being asked to take over the design responsibility for the project.

The courts are littered with cases where both Employers and Contractors have failed to recover valid claims against the Consultants for design issues or defects (and also against one another) due to the contracts put in place when the Consultant has swapped employer.

To avoid a nasty shock later, should you be successful, take the time (and advice) to ensure you get it right.

Is this a lump sum or reimbursable contract?

Thanks for all the comments to my query.

I think Colin Randall gets where I am coming from here, as he is based in HK and our bid is for work in HK!

Apologies for the rather scant details in my first posting. We are an M&E equipment supplier and will be designing, supplying and installing the process equipment and several associated buildings and ancillary works. Foundations and the commissioning and testing of our equipment will be by the client. The price is lump sum with very limited variation provisions.

The client has a nominated consultant which he will retain as the Authorized Person (AP) and Registered Structural Engineer (RSE). The AP and RSE must sign the drawings for submission for statutory approval – which approval (and all other construction licences) we are obliged to obtain.

My concern is that the nominated AP/RSE will gravitate towards the client side during design and introduce preferred engineering (i.e. where there are two solutions, he will choose the more expensive) and generally not look for cost-effective options. I have had bitter experience in the past of this kind of nominated designer arrangement on a large EPC power plant, and it cost us considerable time and money. So, to avoid this and limit this kind of unwanted interference in our design, we should process our own drawings through design development and just use the AP/RSE as a check and sign engineer.

Thanks for your suggestions, and if anyone has any further pointers I would be glad to hear them.

Regards,

John

John,

It sounds as though you’ve had some "interesting" experiences previously....and you’re learning from that. Good on you!

Best of luck.

James.

John,

You may consider asking for an unpriced copy of the Agreement between the Client and his Consultant. I share your view that there may be a tendancy (even unwillingly!) for the Consultant to gravitate towards the side of the "hand that feeds him"!

If you have an unpriced copy of their Agreement, this will enable you to ensure that the Consultant is not overstepping his position, and it will also help to clarify the areas (if any!) in which the Consultant may or may not have authority!

Hope this helps,

Stuart
www.rosmartin.com

Clive,

Thanks for your added comments - yes, judging by your response, I’m pretty sure it’s the project you’re thinking of.

My concern is also based on the fact that they are categorically insisting that we use their own AP. I know about the AP system (my friend was an AP for this very same client on another past EPC project), but I cannot see why we have to use their man other than for the reasons mentioned which all benefit the client. In HK, APs are employed by all the major consultants, so I would have thought it would have been easy to appoint a qualified person from somewhere else and use him as the signing authority. At least we would have had some semblance of control over a reasonably independent firm.

Thanks again.

John